Which of the following statements is correct?
A)The more similar Firm A's product is to Firm B's product, the more likely Firm A is to advertise.
B)Monopolistically competitive firms advertise in order to increase the elasticity of the demand curve they face.
C)According to the signaling theory, the more product information an advertisement contains the more effective it is.
D)Brand names may help consumers if they provide information about the quality of a product when acquiring such information is difficult.

Question

Quizplus · Accepted Answer

Brand names can serve as a signal of quality to consumers, especially when it is hard for them to assess the product's quality directly. This can reduce search costs and perceived risk associated with purchasing.

Which of the Following Statements Is Correct